The company’s tax return is submitted without any audited accounts. Nevertheless, these accounts must be kept for submission when requested by the Inland Revenue Department (IRD). The declaration must be completed so that the information requested reflect the audited accounts that have been prepared. The deadline for submission of the declaration for the tax year 2010 is until December 31st, 2011. The online registration for 2010 can be submitted until March 3st1, 2012.
For the fiscal year 2010, the income statement may be submitted in hard copy until June 30, 2011. Based on the Assessment and Collection of Tax Act, from July 1st, 2011, the company’s income statement should be submitted electronically viathe electronic system of Tax Income TAXISNET.
The statement of the company consists of 9 parts. For the IRD to receive an Income Tax Return of a company, it ensures that all fields are correctly completed and that the Tax Identification Number (TIN) has been declared as required. Particular attention is given in Section 7 of the statement so that the person signing the declaration has a TIN.
Below we analyse each part of the I.R4A 2010 with special emphasis on points that must be completed as required, to ensure that no problems may occur regarding its receipt by the IRD.
Part 1 – Company Details
In this section, the TIN and the name of the company are requested, as well as the data of the auditors, the executive director, secretary, lawyers and bankers. It should also be determined whether there was a change regarding the shareholders during the fiscal year, without mentioning the names of shareholders. Moreover, if companies fall under the Merchant Shipping Act, they must choose the manner of their taxation accordingly.
All companies must state whether their audit and their address during the fiscal year was in Cyprus or not. Finally, in this part, the company should indicate whether it is a financial, insurance, inactive, or a ship owner company. If the company is a financial or insurance one, there are special separate forms (I.R 4 Bank and I.R.4 .Insurance respectively) which should be completed.
Part 2 – Accounts
The income statements and audited accounts must be submitted in euro.
Part 2.1 – Balance Sheet – In this part all amounts are completed under the company’s balance sheet, as prepared and included in the audited accounts of the company.
In cases where audited accounts are prepared in foreign currencies, the amounts are translated into euros. Caution should be exercised in the lines “D” and “F” where the total amounts should match.
Part 2.2 – Profit and loss account – All income and expenses of the company are to be completed, in accordance with the audited accounts.
Part 2.3 – Notes to the financial statements – In this section additional information is provided regarding the amounts included in the balance sheet (Section 2.1) and the profit and loss account (section 2.2) as well as other information. The notes 1 to 9, 12 and 17 are to be completed according to the accounting year. Notes 10 and 13 to 16 are related to the fiscal year. Note 11 applies for both.
Part 3 – Determination of taxable income
In this part all necessary amendments are made to the accounting profit or loss of the year, in order to determine the taxable profit or loss for the fiscal year 2010.
Part 4 – Determination of Corporation Tax
In part 4.1 and 4.2 an analysis of the taxable income or loss of the year is made on specific sources of income, and the offsetting of losses carried forward from previous year; as well as the granting of credit for permanent damage to an establishment abroad. Also, at this point, the offsetting of losses of the group assigned to the company, or that the company has given to other group companies is completed. In Part 4.3, the total taxable income or loss is transferred on the following year. In section 4.4, the calculation of Tax Income attributable to the taxable income for the year is being calculated at a rate of 10%. In Part 4.5, taxes paid, are being estimated (e.g. installment of provisional tax) as well as any charge equal to 10% of the difference between the tax, (as it will be identified eventualy) and of the provisional tax if the provisional taxable income is less than 75% of the taxable income, (as it will be identified eventually).
Furthermore, any credit that is being claimed in respect of foreign tax or tax which has been paid by self assessment may be submitted at this point.
Part 5 – Defence Contribution
Section 5.1.1 is completed in order to calculate the amount that will be accounted for as distributable, and that is subject to Defence Contribution at a rate of 15%. In part 5.1.2 an analysis of the dividends paid by the company to shareholders takes place and in Part 5.1.3 the rates for the years 2005 -2010 should be reported. Parts 5.2.2 to 5.2.4 are completed if the company has an income such as rent, interest and/or dividends from abroad which are subject to Defence Contribution. In Section 5.3 the total Defence Contribution amount, due to the IRD is being calculated.
Part 6 – Return of temporary tax
This part is to be completed in the case where the company has been wrongly withheld a Special Defence Contribution at the source, of any of the revenues of its income.
Part 7 – Declaration
In this section the director, secretary or executive officer of the company, signs a statement that the income is consistent with:
■ the records kept and/or the accounts prepared by the Board
■ the audited accounts such as those prepared by the Management Board and audited by external auditors.
Part 8 – Auditor’s declaration
To be completed by the external auditors / tax advisors of the company who attest that:
■ the parts 2.1 (Balance Sheet), 2.2 (Income Statement) and the notes in Part 2.3, are consistent with either the audited or non-audited accounts of the company, and that
■ anything contained in Part 3 (Determination of taxable income), Part 4 (Determining Corporate Tax) and Part 5 (Determination of Defence Contribution) has been tested properly, and that they comply with the circulars of the IRD.
In the case where the auditor / tax consultant has some reservation regarding the determination of Corporate Tax, the determination of the Defence Contribution or whether they comply with the circulars of the IRD; he / she must indicate his / her reservation at this part, and also the name of the financial statements’ auditor must be stated; (if different from the person who prepares and / or makes the statement).
Finally, the auditor must complete the appropriate box regarding the opinion formed over the financial statements. In the case in which the report of the financial statements, was differentiated, then a copy of the report must be attached with the Income Tax Return.